QUESTION: Dear Mr. Armstrong,
I would first like to thank you for all the information you are making
available publicly. I have two questions to pose, if you deem them relevant to the present state of affairs.
1) What is the difference for an EU citizen of having deposits with an US bank and with a branch of an US bank within the EU? Does it make any sense of having funds with a branch of US bank within the EU?
2) Why are central banks (all of them, IMF included) having considerable gold reserves at present? And how will this affect the coming monetary system reset /overhaul?
Best Regards,
SM.

ANSWER: A branch and an actual account in the USA are legally different. A bank is subject to regulation where it is doing business. So even Deutsche Bank, operating in the USA, is under the US regulations and the Fed and not the ECB. Therefore, having an account at a US bank in Europe is really no different insofar as regulation is concerned. It must post EU debt as reserves, not US dollars. Additionally, the EU can and will pass a law freezing the flight of any capital out of Europe in a crisis. That is standard and all governments act in their own self-interest before those of their subjects. So there is no real difference between a US branch in Europe than any other European bank. If the object is to have a hedge with some cash outside the system in case of a crisis, then take a vacation to Disneyland and open an account directly in the States.

Now with respect to why they have gold reserves, it is simply leftover and they would love to sell it but politically can’t right now. Because of the coming crisis in the euro, which they ALL see behind the curtain but will not speak about publicly, they are at a crossroad. The only currency they can respectfully hold remains the dollar. Both Europe and Japan have destroyed their bond markets. Central banks have been buying equities and gold BECAUSE they have little options but to diversify. The Democrats in the USA with their Green New Deal and other insanity will conclusively destroy the US economy. At the very minimum, the crisis will take on an anticipation effect the closer we get to 2020. With the prospect of a Democratic victory in the USA come 2020, we will see this as the prelude to the Monetary Crisis starting in 2021. The central banks I meet with respect the dark clouds on the horizon. There is no hope for the EU or Japan ending Quantitative Easing when we are looking at a very hard downtrend into 2020 following the Economic Confidence Model. They do listen to our advice these days and are diversifying to survive.

If they eliminate paper money, as the IMF is pleading, the Central Banks believe they will be able to also quietly get rid of the gold which they do regard as a “barbaric relic” of the past. Gordon Brown sold half the UK gold reserves in 1999 and made the low after a 19-year decline from 1980. However, we will cross that road when we arrive that that crisis threshold.

The politicians have a golden rule. When the courts prevent them from raising a tax, they call it something else to impose it. Massachusetts, the bastion of political Marxism, attempted to put on the ballot a new millionaire tax. That was rejected on constitutional grounds by the Supreme Judicial Court. So what are they doing to exploit others? They are violating the Constitution. As pensions run dry for state employees, lawmakers are using a new legislative procedure to impose a tax by calling it a measure to raise money for education and transportation. Of course, such tax increases go into the general ledger. So they can then claim they are raising taxes for children and then use it for themselves. They just pulled that trick off in British Columbia after raising taxes for schools and keeping the money in the general pot.

The morally dishonest politicians in Massachusetts are using a procedure to impose an unconstitutional tax by depriving the Supreme Court the duty to rule on the validity of the tax. They will impose a tax on the wealthiest taxpayers, skirting the Supreme Court’s objections, and place the measure before voters where they know the majority will hate anyone who has more than they do. They call it the Fair Share Amendment which will add 4% to their tax bill. They are proposing to change the state constitution that prohibits discrimination, demanding that income taxes be levied at a “uniform” or flat rate tax and may not be a graduated income under Marxist philosophy. They call it the millionaire tax because they will impose a 4% higher rate on gross income that exceeds $1 million. With state income taxes now exempted from deductions by the Federal government, this maneuver demonstrates that the state is out of control. The Massachusetts income tax rate of 5.10% is higher than all but one of the other eight states that levies a flat income tax. This merely illustrates that governments can NEVERlive within their budgets. They ALWAYS need to take a never-ending higher portion of people’s income.  If governments were properly managed, tax rates would never have to increase.

Meanwhile, New York Governor Andrew Cuomo has suddenly seen the light in a vision from haven. OMG, he must have decried waking up from a nightmare. If you tax the rich, they leave? OMG. Who would have ever imagined? He woke from his dream and actually acted on it. He stood up in the state where Alexandria Ocasio-Cortez was elected and actually said, “I don’t believe raising taxes on the rich,” Cuomo said. “That would be the worst thing to do. You would just expand the shortfall. God forbid if the rich leave.”

We will have to add Massachusetts to the list of states to leave ASAP. Obviously, they are slower in their thinking process than even New Yorkers